CHARTERED ACCOUNTANTS: FEDERAL BUDGET CAN’T BE SILENT ON SUPER

Peak accounting body Chartered Accountants Australia and New Zealand says next week’s Federal Budget cannot be silent on superannuation reform, as cost of living pressures continue to impact on everyday Australians.

With Treasurer Jim Chalmers to hand down his first Budget on Tuesday under a backdrop of rising interest rates and the possibility of a global recession, CA ANZ says that reform to superannuation must be a central part of the Albanese Government’s economic narrative.

“We understand the Budget realties the Government faces, and their first Budget will have a focus on funding the initiatives they took to the election in May,” said CA ANZ Superannuation Leader Tony Negline. 

“However, reform is vital at this time, and central to this is the Non-Arm’s Length Income or ‘NALI’ rules which may have a dramatic impact on the viability of all super funds. 

“The current NALI rules need urgent reform so that relatively benign arrangements do not see superannuation funds’ income and realised capital gains taxed at 45 per cent penalty tax rate.  

“This very high tax rate could apply to compulsory Superannuation Guarantee employer contributions, which means these contributions will taxed at 45 per cent rather than 15 per cent.

“We have been asking the government to clarify how it plans to ensure the NALI rules remain an anti-avoidance measure and not a penalty that could apply to everyone and we hope the government makes an announcement in the Budget.

“Australia’s tax and superannuation systems are unreasonably complex and costly to administer. There are too many rules across too many pieces of legislation and regulation. Simplification will reduce costs and enable better outcomes to be delivered more efficiently. 

“Even things like clarifying and aligning the definitions of employee and contractor will make a difference. It remains inconsistent and uncertain from an income tax, superannuation, and workers’ compensation perspective. Alignment would help greatly with all Commonwealth industrial relations, tax and super laws,” said Mr Negline.

CA ANZ Chief Executive Ainslie van Onselen warmly welcomed the pre-Budget announcement from the Prime Minister regarding the extension of paid parental leave.

“The pre-Budget announcement from the Prime Minister on the weekend to extend paid parental leave to 26 weeks by 2026, and provide flexibility for parents to choose how to split the leave between them, builds on the momentum that we advocated for so strongly at last month’s Jobs and Skills Summit and will have a positive impact on the economy, and working families,” Ms van Onselen said.

“We will continue to advocate for initiatives that close the gender pay gap and return greater equity into the employment market, especially around the removal of the annual super cap, and seeing it replaced by a lifetime cap after a suitable transition period. 

“The current annual cap penalises people who can only make larger contributions late in their working career. It is particularly unfair on women who often take extended leave to care for children and other family members, reducing their ability to grow their super, and when they try to catch up later, they are penalised. 

“CA ANZ is looking forward to seeing what else is contained in the Budget that enables the Federal Government to deliver important reforms that positively impact workforce participation and make Australia a destination of choice for skilled workers across the globe.” Ms van Onselen said